U.S. unemployment rate falls to 7.4%, but gains meager
By FRANCINE KNOWLES Staff Reporter August 2, 2013 7:42PM
FILE - In this Thursday, March 14, 2013, file photo, a crowd of job seekers attends a health care job fair, in New York. U.S. employers added 162,000 jobs in July 2013, a modest increase and the fewest since March. At the same time, the unemployment rate fell to a 4Ω-year low of 7.4 percent, a hopeful sign. (AP Photo/Mark Lennihan, File) ORG XMIT: NYBZ201
Updated: September 4, 2013 6:12AM
The U.S. unemployment rate hit the lowest level in four-and a half years in July, but job growth remained lackluster as sequestration and questions about health care reform are being felt nationally and in Illinois, economists said.
The U.S. jobless rate fell to 7.4 percent last month, down from 7.6 percent in June, the Labor Department said Friday.
The nation added 162,000 jobs in July. But in revisions in the jobs report, there were 26,000 fewer jobs added in May and June than previous thought.
Meanwhile, many of the jobs added last month were from lower-paying industries, and more people found themselves forced to work part-time.
The biggest job gains were in retail trade, which added nearly 47,000 jobs; and at food services and drinking places, which added 38,000.
It’s an issue of quality verse quantity, economists note.
“Restaurants and retail were the two fastest growing job categories this time around as they have been for several months, and those jobs pay considerably less than say a job at a utility [company] or financial services firm or at a manufacturer or a construction job,” said economist Robert Johnson of Chicago-based Morningstar Inc.
“We’re growing the jobs that don’t pay as well, and that certainly means a little less income in peoples’ pockets. You’d rather see a better distribution of those jobs.”
Manufacturing added only 6,000 jobs and health care added only 2,500 in July. For the year, health care has added an average of 16,000 jobs per month, down from an average of 27,000 per month in 2012.
Medicare cuts are beginning to hit health care providers as the economy is seeing the effects of the across-the-board federal spending cuts, the so-called sequestration, notes Mesirow Financial Chief Economist Diane Swonk.
“The health care industry is a major industry here in the Midwest, so the Medicare cuts are beginning to have an impact here [in Illinois]” as well as nationally, she said.
“Health care was a real mainstay of growth in employment during the recovery, and now it really has slowed rather dramatically,” Johnson said.
“People are kind of waiting to see what happens with the Affordable Care Act,” he said referring to President Barack Obama administration’s health care reform law.
Professional and business services added 36,000 jobs, financial activities rose by 15,000 and wholesale trade added 14,000.
The average work week slipped by 0.1 hour to 34.4 hours. Average hourly earnings fell 2 cent to $23.98. But that followed a 10 cents increase in June. Year-over-year, average hourly earnings have risen by 44 cents or 1.9 percent.
The number of people working part-time involuntarily rose by 19,000.
Johnson said that fact that job growth is continuing is positive.
“The long-term trend is still there,” he said. “We’re growing private sector employment about 2 percent year over year.”
Illinois’ employment report isn’t due out until August 15. The state’s jobless rate, which typically is higher than the national rate, was 9.2 percent in June, up from 9.1 percent in May and up from 9 percent in June 2012.
Johnson said recent data show signs of improvement in manufacturing in the region, and he expects Illinois’ employment picture to benefit as a result.
Swonk foresees improvements in Illinois tied to the growing tourism industry here.
“We’re big in leisure and hospitality,” she said. “That’s where a lot of the hiring has occurred. We’ve attracted a lot of tourism, so we’re continuing the trend on that. [In] leisure, hospitality, food, retail industries, we are showing strength.”